STUMP » Articles » Taxing Tuesday: Yadda yadda yadda » 6 August 2019, 16:24

Where Stu & MP spout off about everything.

Taxing Tuesday: Yadda yadda yadda  


6 August 2019, 16:24

So, as I wrote on facebook:

It’s been a bad several weeks for the pain.

So I don’t have much for today, but I did want to point out one story: a tax hike in Japan.


WSJ: Where Rolling Out a Sales-Tax Bump Requires a Certain Finesse

Oct. 1 is shaping up to be a banner day for the Japanese consumer. Smaller shops across the country will begin offering 5% back on purchases. Preschool will be free starting that day, a car-acquisition tax will be wiped off the books, and much more.

Prime Minister Shinzo Abe might as well be a TV pitchman barking, “Think of the savings!”

Just don’t think, if you please, about the other tax change happening on Oct. 1. The national sales tax will rise to 10% from 8%, so everything that doesn’t get a discount or break will cost more.

Again, remember that’s not a 2% increase in the tax.

That’s a

Is that clear?

It’s an intriguing experiment in mass psychology by the world’s third-largest economy. History shows Japanese consumers take sales-tax increases badly — so badly, in fact, that many economists say this treatment for the country’s fiscal woes isn’t worth prescribing. Mr. Abe is betting the medicine will go down more easily if it is coated in sweet treats such as one-time bargains and tax breaks that partially cancel out the increase.

The experiment is worthy of the world’s attention because many other countries, including the U.S., are also grappling with large budget deficits that raise concern about whether governments can cover future pension and health-care costs.

Japan had bitter experiences in 1997 and 2014 when it raised its sales tax. The April 1, 2014, increase to 8% from 5% caused not only a sharp short-term drop in retail spending but also semipermanent damage to Japan’s fragile psyche. Five years later, private consumption has yet to top the peak in the first quarter of 2014.

Would you like to guess why the increase from 5% to 8% went poorly?

Does everybody want to do the math?

This time, the tax breaks and benefits taking effect Oct. 1 will produce a short-term stimulus greater than the fiscal tightening caused by the tax increase, according to Mr. Abe’s government. The catch is that the sales-tax increase is permanent, while the 5% discounts and some other breaks expire in the next year or two.

Over the longer term, the government will end up ahead by about $20 billion a year, says the Bank of Japan. That is less than half of what it would get by raising the sales tax to 10% without any compensating measures.

Mr. Abe said on July 22 his steps to cushion the blow would be more than enough. “We will strongly support domestic consumption, which is the engine of the economy,” he said.

One of his former advisers, Satoshi Fujii, a social-sciences professor at Kyoto University, said he quit his role late last year because he didn’t agree. “Japan is opening the door to hell,” Mr. Fujii said in an interview. Recalling a World War II battle plan that didn’t go well for Japan, he said the tax increase “is a very absurd political decision, which resembles the suicide attack by the battleship Yamato.”

Um, wow. Those are strong words.

Anyway, I knew about this because the news I watch is Japanese news. I like the distance. Also, it’s interesting to learn about Japanese issues, because some of their problems are precursors to what will hit the U.S. The Japanese population is aging and shrinking.

So I will be interested in how the tax hike will be absorbed. Or not.


Okay, this happened to me, so I have a little reporting to do. On August 1, a bag tax went into effect in Connecticut, where I do a lot of shopping.

From before the tax went into effect: 5 Things To Know About CT’s Bag Tax

orgetting to bring your own bags to the store will cost you 10 cents per bag starting Aug 1. That’s when the state starts its tax on single-use plastic shopping bags. You may have noticed reminder flyers at your local grocery store or had a cashier try to sell you a reusable bag at checkout.

1) First A Tax, Then A Ban
The state expects to raise $30.2 million in fiscal year 2020 and $26.8 million in fiscal year 2021 from the new tax, which was instituted as part of the state budget.

The 10-cent tax will last for almost two years and single-use bags will be banned July 1, 2021.

2) What About Bags In The Meat And Produce Aisle?

It’s important to note that the tax doesn’t include bags that are used to contain meat, seafood, produce and other similar items that aren’t already in bags at the store.

3) Reusable Bags Can Contain Harmful Bacteria

One of the biggest pros about single-use bags is that they can be discarded after one use, which reduces the risk of bacterial contamination, especially when it comes to raw meats and produce that can carry E. coli or Salmonella.

4) My Town Passed A Single-Use Plastic Bag Ban, Now What Happens?

Some towns have already passed their own single-use plastic bag bans. These local ordinances still count so long as they are the same or more stringent than the state law. It allows towns to regulate the use of single-use paper bags, such as enabling stores to charge for bags.

5) What About Paper Bags?

Paper bags don’t fall under the state law, but could fall under local laws. It’s important to note that while paper bags will degrade faster than plastic, it takes more energy to process a paper bag than a plastic one. One study found that paper bags would have to be used three times to have the same environmental impact as a plastic bag.

So, last Friday, I swung by Walmart to do a little shopping. I bought some cookies, some crackers, and something Stu needed (and I can’t forget what he wanted me to grab). I knew about the bag tax before I went, so I kept my eyes open as I walked in.

What I saw: not much in the way of plastic bags. I use the self-checkouts at Walmart, and there were no plastic bags at the stations. You could type in the number of bags you wanted, to get charged (when I went to a local supermarket, it had the same funcitonality). But people weren’t grabbing bags.

What were they doing? They just put the items back into the cart, pushed the cart to their cars… and there were a LOT more abandoned carts out in the parking lot. To be fair, people not going a few extra yards to put the carts in a corral is pretty common at Walmart, but I believe that more people were pushing out carts where they would have just toted it in the bags in the past. They should do it like Aldi’s with the locked-up carts.

I had a couple bags on hand with me, because I was prepared. And I just carried some of the items loose. A lot of people were just holding cases of items themselves.

The lady checking receipts at the door was a bit nonplussed. I have a feeling she had a day full of that.

Oh, and at the grocery store? There was a disabled man checking out who was very pissed at the bag tax. We was on a scooter.

I bet this is going to get really fun(ny) once the bags are completely banned. CT pols, I have a winning issue for you: promise to ban the bag tax, and bring back the bags!



Twitter changed up their site recently. I am not happy.

This is also incredibly stupid. Do they think Trump is not going to win the Republican primary? And do they think this is going to boost their “kill the electoral college!” cry?

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